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The iPhone will not be made in USA regardless of what Trump says

The iPhone will not be made in USA regardless of what Trump says

It can’t be, and that’s been reality for years.

Donald Trump recently stated that he wanted Apple manufacturing back to the U.S.:

Republican presidential candidate Donald Trump said he will push for companies including Apple Inc. to bring manufacturing back to the United States.

“Make America great again,” Trump said in a speech at Liberty University in Virginia. “We’re going to get things coming. We’re gonna get Apple to start building their damn computers and things in this country instead of in other countries.”

Some are interpreting his words as saying he would use the power of government to force Apple back, others put a more benign spin on it, that he would develop policies to encourage Apple.

Regardless, it is an empty promise.

When I heard about the statement, I recalled an article from a few years ago making the case that the scale of what is needed is so enormous, that the U.S. does not have the engineering or manufacturing capacity, much less the labor force willing to work under conditions necessary.

I don’t know if this NY Times article is the one I recalled, but it made the point back in 2012, How the U.S. Lost Out on iPhone Work:

When Barack Obama joined Silicon Valley’s top luminaries for dinner in California last February, each guest was asked to come with a question for the president.

But as Steven P. Jobs of Apple spoke, President Obama interrupted with an inquiry of his own: what would it take to make iPhones in the United States?

Not long ago, Apple boasted that its products were made in America. Today, few are. Almost all of the 70 million iPhones, 30 million iPads and 59 million other products Apple sold last year were manufactured overseas.

Why can’t that work come home? Mr. Obama asked.

Mr. Jobs’s reply was unambiguous. “Those jobs aren’t coming back,” he said, according to another dinner guest.

The story explains why:

It isn’t just that workers are cheaper abroad. Rather, Apple’s executives believe the vast scale of overseas factories as well as the flexibility, diligence and industrial skills of foreign workers have so outpaced their American counterparts that “Made in the U.S.A.” is no longer a viable option for most Apple products…..

Apple executives say that going overseas, at this point, is their only option. One former executive described how the company relied upon a Chinese factory to revamp iPhone manufacturing just weeks before the device was due on shelves. Apple had redesigned the iPhone’s screen at the last minute, forcing an assembly line overhaul. New screens began arriving at the plant near midnight.

A foreman immediately roused 8,000 workers inside the company’s dormitories, according to the executive. Each employee was given a biscuit and a cup of tea, guided to a workstation and within half an hour started a 12-hour shift fitting glass screens into beveled frames. Within 96 hours, the plant was producing over 10,000 iPhones a day.

“The speed and flexibility is breathtaking,” the executive said. “There’s no American plant that can match that.”

The Foxconn City is an example of something that could not exist in the U.S. in 2016:

An eight-hour drive from that glass factory is a complex, known informally as Foxconn City, where the iPhone is assembled. To Apple executives, Foxconn City was further evidence that China could deliver workers — and diligence — that outpaced their American counterparts.

That’s because nothing like Foxconn City exists in the United States.

The facility has 230,000 employees, many working six days a week, often spending up to 12 hours a day at the plant. Over a quarter of Foxconn’s work force lives in company barracks and many workers earn less than $17 a day….

Foxconn Technology has dozens of facilities in Asia and Eastern Europe, and in Mexico and Brazil, and it assembles an estimated 40 percent of the world’s consumer electronics for customers like Amazon, Dell, Hewlett-Packard, Motorola, Nintendo, Nokia, Samsung and Sony.

“They could hire 3,000 people overnight,” said Jennifer Rigoni, who was Apple’s worldwide supply demand manager until 2010, but declined to discuss specifics of her work. “What U.S. plant can find 3,000 people overnight and convince them to live in dorms?” ….

Another critical advantage for Apple was that China provided engineers at a scale the United States could not match. Apple’s executives had estimated that about 8,700 industrial engineers were needed to oversee and guide the 200,000 assembly-line workers eventually involved in manufacturing iPhones. The company’s analysts had forecast it would take as long as nine months to find that many qualified engineers in the United States.

In China, it took 15 days.

Apple CEO Tim Cook made a similar point on 60 Minutes recently.

I don’t discount that some relatively small amount of manufacturing could return, and perhaps some engineering, but the idea that the U.S. would become the home of iPhone or other major Apple manufacturing doesn’t hold up to even a quick Google search.

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Comments

At this point I am in a hurry. I do feel that there is something here that I want to point out and will expand on later.

Are you out of your mind?

First it’s a lie that we cannot make them here.
Second, it we cannot make them here then we are royally fucked. Why?
The electronics in “smart bombs” and other advanced ordinance is no different then the parts of an iPhone. Do we want to go to war with China with bombs that are stamped “made in China”?
If we can’t make them here then we have some major problems.

    inspectorudy in reply to HandyGandy. | January 20, 2016 at 4:53 pm

    I don’t know how old you are but about twenty years ago it was revealed that we could not even build US war planes without a huge or yuuuge if you prefer, amount of Japanese and Chinese electronic components. I don’t think that has changed very much since there are no NEW electronic manufacturers in the US that make the many IC’s and sundry parts used in our missiles and planes. This is just another blowhard statement from the carny.

      HandyGandy in reply to inspectorudy. | January 20, 2016 at 8:14 pm

      Well I hope it was not Chinese capacitors because our planes will start crashing. 🙂

      The incident that you refer to is probably the sale of Fairchilds electronics, the last US RAM maker at that time.

      The thing is that within a short period of time we could have build a plant to make RAM, but it would have been expensive.

      What is more “the plans” for a computer stayed in the US.

      The professors claim is that we can not make iPhones because we are not up to it technically.

    Kondor77 in reply to HandyGandy. | January 20, 2016 at 4:56 pm

    We most definitely can make them here…for $5,000 per iPhone. Econ 101.

      Albigensian in reply to Kondor77. | January 22, 2016 at 10:59 am

      Electronics assembly is largely automated; the machines used to assemble electronics assemblies, and the components used in these assemblies, are available everywhere, including here. It’s not as if these things are assembled by armies of Chinese armed with soldering irons.

      The phones surely could be made here, perhaps for a 20% price premium over what it costs to have them made in China. It could not be done tomorrow, as time (and a long-term contract) would be necessary to ramp up production. BUT it surely could be done, and for far less than $5,000. per phone.

      Whether it should be done is a far different question. Although there’s much to be said for the economics of Comparative Advantage, there’s also the reality that our military is increasingly worried about hardware Trojans- chips which work as specified, but which could be re-purposed (or at least disabled) after receiving a sequence of digital data. Adding a Trojan to a chip is not a big technical challenge, and it would be such a tiny part of the overall chip that its discovery would be very unlikely.

    Brian Epps in reply to HandyGandy. | January 20, 2016 at 6:35 pm

    Interestingly enough, I work in a semiconductor fab that makes embedded processing chips that go into many devices that say “Made in China.”

    In one case, a popular brand of headphone is dependent on one chip. It incorporates an analog multiprocessor, A-D controls, DSP, power control, and EPROM all on a single device. The one part that actually makes it work is made in the US. They’ve tried to make it in China but it is cheaper to make in the US (Greater yield by an order of magnitude). This device is shipped still on uncut wafer to China where they cut, packaged, attach wires and speakers, and put it in a molded plastic shell and then ship it back to the US with the diplomatic lie “Made in China” on the box.

    Trump would put thousands of American workers out of a job with his tariffs.

      HandyGandy in reply to Brian Epps. | January 20, 2016 at 8:25 pm

      Let me point out that I did make a brief comment below about Trump, but what Trump said was not my main concern. My main concern was the Professor’s claim that we were not technologically capable of making an iPhone.

      If anything your post supports that statement. your claim is that all we need from the Chinese are the peon work. We don’t even need that most of it can be done by CNC devices. Probably even better then by people.

        Henry Hawkins in reply to HandyGandy. | January 20, 2016 at 10:01 pm

        “My main concern was the Professor’s claim that we were not technologically capable of making an iPhone.”

        Except he didn’t say that. He agreed with an article that said we are economically incapable, due to grossly higher costs because in China:

        “The facility has 230,000 employees, many working six days a week, often spending up to 12 hours a day at the plant. Over a quarter of Foxconn’s work force lives in company barracks and many workers earn less than $17 a day….”

        Are you willing to live in company barracks and work 12 hours for $17 a day? Do you know any American tech workers who are?

          HandyGandy in reply to Henry Hawkins. | January 20, 2016 at 10:41 pm

          “My main concern was the Professor’s claim that we were not technologically capable of making an iPhone.”

          Except he didn’t say that.

          Except that he did say that. Several times and he quotes articles which make the same point.
          The first — in this case his own words:

          that the U.S. does not have the engineering or manufacturing capacity,

          You also claim that tech workers sleep in barracks. Yes those are workers for a tech company, but technically the work they do is not what I would call “tech work”.

          Henry Hawkins in reply to Henry Hawkins. | January 21, 2016 at 10:05 am

          The reason the ‘capacity’ doesn’t currently exist is purely for economic reasons. Of course we have the technological ability, but it can’t survive economically versus the slave wages of foreign economies. Cheap Japanese steel killed American steel, not American ability to make steel. Same thing.

          Ragspierre in reply to Henry Hawkins. | January 21, 2016 at 10:13 am

          American steel is alive and well. The dinosaur steel industry of a few decades ago was one of the worst managed sectors of our economy. It deserved to die, and be replaced with a MUCH more efficient successor.

          And Japanese “slave labor”…!?!?!? Please, let’s stop using silly terms!

          CRIPES…!!!

“When I heard about the statement, I recalled an article from a few years ago making the case that the scale of what is needed is so enormous, that the U.S. does not have the engineering or manufacturing capacity, much less the labor force willing to work under conditions necessary.”

Well, there you go then. Let’s just give up on our manufacturing sector.

I’m sorry, Prof. Jacobsen. Usually I find your work to be, at the very least, thought-provoking. This is just ridiculous.

Apple’s tax penalties for coming back to the US are higher than their current available cash (which is a huge sum, even by mega cap standards).

Tim Cook said they would consider bringing their company back with a one time tax forgiveness offer to erase that number…and why not? we aren’t getting jack from them now anyways.

Negotiating posture.

How much would an iPhone cost, if they were made in the USA?

Or, more importantly, how much would people be willing to spend to buy an iPhone made in the USA?

    HandyGandy in reply to rinardman. | January 20, 2016 at 5:09 pm

    The answer is nothing. The question is how much less would Apple make if they were made in the US? The answer is plenty.

    Apple has the biggest markup in the industry, by a wide margin.

    iPhones are a “boutique” product. They are like Rolls Royce or mont Blanc. You aren’t paying for quality you are paying for the name.

    Texas Instruments for example makes the innards of some “smart” phones that cost much less.

    Kondor77 in reply to rinardman. | January 20, 2016 at 5:09 pm

    100%. Speaking from experience regarding my day job, many of my American customers request that more of my merchandise be American made. Currently throughout my catalog it’s a solid 80-20 favoring Chinese/Asian made.

    Recently I had the opportunity to offer an American made version of a Chinese product at a substantial markup – nearly 40%. Listed concurrently, initial sales were surprisingly promising. But it was short lived, and it took less than two weeks for it to revert back to the cheaper product. Which, through my testing and customer reviews worked exactly the same. I even had customers who bought American made, and returned it within a few days to exchange it for the Chinese one.

    We are a consumerist society. We want what we want, and we always want the best product – for the RIGHT price.

    Brian Epps in reply to rinardman. | January 20, 2016 at 6:42 pm

    Some of the most expensive parts are made in the USA and Japan. They are shipped to china and called capital goods in spite of the fact that they are manufactured. This allows China to put “Made in China” on the box even though the most complex devices involved aren’t.

    Mustn’t upset the Chinese self-image as the pinnacle of civilization, after all. They are almost as bad as New Yorkers.

      HandyGandy in reply to Brian Epps. | January 20, 2016 at 7:49 pm

      But that is not the Proffesor’s point. His point is that we don’t have the technical expertise in enough quantity in the US. Not that we don’t have the peops to “clean the silicon toilets”.

Here’s what’s funny…

Manufacturing in the U.S. is at an all-time high.

True fact.
http://mercatus.org/publication/us-manufacturing-output-vs-jobs-1975
and
https://research.stlouisfed.org/fred2/series/OUTMS

Note that, while we produce MORE, we employ fewer people.
This is consistent with every other developed nation in the world, and it simply reflects the effect of capital, which buys force-multipliers to make each worker MORE productive.

Not long ago, most Americans were busy trying to grow enough food for themselves and the rest of us. Shortly after that, most of us were involved in making things. Now we’ve move on to the next phase, and it ain’t no bad thing.

We produce stuff here we SHOULD produce, that NOBODY can produce more EFFICIENTLY. Cheap labor is NOT LEAST COST labor.

We don’t have enough people employed, for sure, in manufacturing, which is a shame, and a direct result of GOVERNMENT repression of the private sector.

Prof Jacobsen should stick to his day job and work a little harder at that.

Here’s his favorite “Consistent Conservative” and Constitutional lawyer who can’t seem to keep his positions straight. One minute it can’t be changed because it’s “in the Constitution” and we all should get over it and all of a sudden it’s a terrible “law” he wants to change. Then, he has the unmitigated gall to claim his 2nd position was the one he had all along. WTF

https://m.youtube.com/watch?feature=youtu.be&v=4zBW8vLnRDY

So we can’t make iPhones in the US because of, well, slavery and environmental laws. Why don’t they just come out and say that instead of all the crap about engineering etc…

    Ragspierre in reply to PRNeoCon. | January 20, 2016 at 5:31 pm

    We certainly COULD make iPhones here. Nobody but the very well-off could afford them.

    You could make your own pencils. You’d starve to death in the enterprise.

      PRNeoCon in reply to Ragspierre. | January 20, 2016 at 8:54 pm

      I’m a free trader, but don’t you recognize that China’s selling slavery. Waking up 200k people at 3 am… Why don’t we import a bunch of South Americans and chain them to tables…

      We will make them here once robotics advance unless our tax laws don’t change – then there is an incentive to leave profit overseas in lower taxed jurisdictions!

        Ragspierre in reply to PRNeoCon. | January 20, 2016 at 10:03 pm

        There MAY be some slave labor in China, but not where American consumer goods are produced.

        The workers are employees who lining up for the chance to be hired, and the plants have international auditing outfits traipsing through them and reporting on conditions.

        I can’t recall all the times I’ve rolled out of bed at 3:00 am to go work a distant rig move, or be at a drilling location to make a 6:00 am tire (oil field for shift).

          PRNeoCon in reply to Ragspierre. | January 20, 2016 at 11:22 pm

          So the employees at those companies are free to just walk away in iPhone production season or complain. – no because they are slaves.

          I bet when you woke up at 3 am you were making up at $17. Boo boo for you. I bet there are Venezuelan oil workers who could have come here and done your job for half of what you make and been ecstatic and willing to worked harder than you. You are just lucky to work in a field where your job isn’t being outsourced or insourced yet. Everyone is a free trader until their ox is being gored.

          Like I said I’m a free trader but insist on fair trade. I have always been uncomfortable with trading with China because they are our largest geopolitical foe. I’m ok with Foxconn in Brazil. Or if they were to set up in say India.

          Ilast rant point, if their workers are so eager and productive why are they trying to replace them with robotics? Because they aren’t happy and free as evidenced by the rash of suicides that they are now better at covering up!

    snopercod in reply to PRNeoCon. | January 20, 2016 at 5:35 pm

    Don’t forget the lawyers!

“Make America great again,” Trump said in a speech at Liberty University in Virginia. “We’re going to get things coming. We’re gonna get Apple to start building their damn computers and things in this country instead of in other countries.”

This is the same nonsense of getting Mexico to build “The” wall. Unless American manufacturers can build these items with robots they will never bring those jobs back here. People like obama and the Demorats have made building anything here all but impossible. US manufacturers cannot compete with the Eastern mindset and working conditions. But hey, we can always add more ethanol to our gasoline!

theduchessofkitty | January 20, 2016 at 5:07 pm

Even Steve Jobs himself, some time before he died, had said the jobs that left the USA are not coming back. If ever.

Nonsense. 35 years of experience in the tech industry from microproceesors to supercomputers (which by the way are built in the US). There is no structural reason why these products need to be made overseas.

In fact: iPhone and iPad glass are made in Horse Heads, NY. Some touchpads are made in Oregon. The 11 layers of film in the screen are made in South Carolina.

Certainly in China or Malaysia or Singapore a company can recruit engineers and minimally skilled workers to assemble electronics cheaper than in the US. There are fewer opportunities and wages are far lower. A small incremental increase in wages goes a long way.

But, research the burning of a Foxconn plant (glorified warehouse) in China by irate workers who practically enslaved. Then research the other Jabil and Foxconn plants that have been abandoned in China and Malaysia when the workers refused to continue working due to delporable conditions.

Finally ask yourself a question: Why does an iPhone that has 1/3 the technology and 1/8 the components of a laptop sell for 3x as much? Certainly Apple is entitled to whatever profit they can command. The question is why are you willing to pay it?

    Ragspierre in reply to verm. | January 20, 2016 at 5:24 pm

    You don’t understand it, but you just made the case for Hayek’s Pencil

    http://cafehayek.com/2012/11/23654.html

    The genius of markets is that they use every resource MOST efficiently.

    Another genius of markets is that engineers don’t get to decide what we think is valuable.

    HandyGandy in reply to verm. | January 20, 2016 at 6:35 pm

    Not to mention that in the electronics itself now sit firmware that is in violation of the GPL. In the nonApple desktops and nonApple laptops, we had a BIOS and engineers could build on top of that. In these components we don’t know what’s in the system.

    The GPL for those that do not know, says that if you distribute this software in modified form you must provide the source of the modification.

    The companies aren’t making any serious proprietary modifications to the software that they do not want to release, their major problem is that they don’t know exactly what source code is in the their released version.

    Ask any senior member of the IT staff of a Fortune 500 what they would do if the CEO was telling them to buy some critical software from a consultant without source code. as opposed to some consultant who would give detailed documentation on the source code for 100 times as much. The majority would say they would quit. They’ve been through it before. That’s why they have machines emulating DOS machines ( preWIndows ) machines to run some of their inventory software. They don’t want to go through it again. They want the soruce to every piece of software running on their systems.

http://libertyunyielding.com/2016/01/18/the-slave-wage-scandal-they-would-be-crazy-not-to-tie-this-to-hillary/

Cheryl D. Mills, long-time friend and confidant of Bill and Hillary Clinton, is promoting a 23 cents-an-hour wage in the West African nation of Ghana to lure textile and apparel industry companies to invest there even as the former secretary of state advocates a $15-an-hour “livable wage” here.

http://blackivygroup.com/markets-2/

Cheryl Mills – Founder & Chief Executive Officer

A question no one has asked: why is it that in China, Foxconn (and other major factories) can hire hundreds of thousands of workers who will work 60 to 70 hour weeks, live in dormitories, and eat biscuits and tea?

Answer: because in rural China, the alternatives are worse.

This is the same reason why a person in a poor Caribbean country will sew baseballs for a dollar an hour — it beats harvesting sugar cane. It’s why a person in a poor Asian country will make tennis shoes for five dollars a day — it beats walking behind a water buffalo.

At a personal level, the economy is relative: what options do you have? If your best option is to work at the Foxconn factory, that’s what you do.

This then provides the answer to the overarching question, why Apple can’t/won’t make iPhones in the U.S.: because the market dictates a price point at which the phones will sell. At that price point, the sales revenue won’t cover the costs of making the device. You can’t get an American to sit at a bench for 70 hours and live in a dormitory, for $100 a week.

That might not be “fair”, and it may cause you to rail at the social injustice. But it is economics.

    Ragspierre in reply to stevewhitemd. | January 20, 2016 at 6:19 pm

    “You can’t get an American to sit at a bench for 70 hours and live in a dormitory, for $100 a week.”

    Which is a testament to the incredible success of market economics.

    We can’t be made to do that kind of work because we simply have so many MUCH better choices, provided by market successes.

    You also can’t make a German, Frenchman, Irishman, Italian, Israeli or any other person in a developed country to do it, and for the same reasons.

    AND the level of absolute poverty in the world has declined in an AMAZING way DIRECTLY as a result of the expansion of market economics and trading world-wide. Just in the last two decades.

It could be, but it would require a rejection of environmentalism or “green” lobbyists, liberal fiscal policies, and the mass appeal of instant gratification.

Apple had redesigned the iPhone’s screen at the last minute, forcing an assembly line overhaul.

And that’s why Apple can’t do it here.

It’s not a question of manufacturing at all. It’s a question of management.

    HandyGandy in reply to tom swift. | January 20, 2016 at 7:26 pm

    You’re not completely clear on what you are saying, at least to me. So let me rephrase what you said in a way that agrees with my thought.

    What we are seeing is the manufacturing workers being abused, literally driven to suicide, because of bad management.

    Apple had three choices,
    1) Forgo the changes. That would never happen because Jobs would not allow it.
    2) Delay the release to retool in a reasonable and calm way. Again Jobs woul.d not allow it.
    3) Abuse the workers to fix the problem.

    The big question is what would you think of the product if you replaced Apple with Chevy, iPhone with Cavalier, and screen with brakes. Would you want to buy that product.

    There is simply no excuse for last minute changes.

COUGH!!! COUGH!! Bull SH#T… Stem Worker here!!! I designed the controls of the machine that finishes the cases for the Iphone, and Ipad. Apple swore up and down that if we designed the machine and proved out the concept they would buy the machines from us by the 1000’s. Instead when we proved the concept they stole the design and had the machines built in china.

First Solar wasn’t much better, but they at least bought the first several hundred from us.

There are two principles at discussion here. The first is Donald Trump’s statement. The second is whether we can build iPhones in the US.

This is the only time I will address the Trump aspect.

I don’t think we have to bring all aspects of iPhone manufacturing back, or really that we will even if the whole power structure agreed.

I do however think it is important that we be able to bring all the manufacturing back in a short time if we so wanted. Anything else and we have no national security.

I also don’t believe that we should be using products which rely on what is essentially slave labor. I don’t care for how we treat some of the workers in the US as royalty, but I also don’t want us to treat them like dogs either.

    Ragspierre in reply to HandyGandy. | January 20, 2016 at 8:29 pm

    So, you’d put tens of thousands of Chinese workers out of work?

    See, those workers line up for those jobs. They WANT them badly. Just like Milton Friedman’s mom WANTED badly to have the chance to work in a New York City sweat shop.

    That’s the nature of a market exchange; I have something I am willing to trade for something you have and are willing to trade.

    Now, if that bothers you, guess what…??? The MARKET allows you to do something about it!

    As with “fair trade coffee” or what-ever-the-hell it’s called, if you and like-minded people get together and show there is a DEMAND for iPhones you are willing to pay a premium for to buy some “virtue signaling”, by gawd the MARKET will provide you iPhones made by people earning a $10.00 minimum wage!

    And I think that’s wonderful! I LOVE it!

    Just don’t ever try to impose it on ME.

      Anonamom in reply to Ragspierre. | January 20, 2016 at 11:41 pm

      “That’s the nature of a market exchange;…”

      If you believe that today’s global economy in any way resembles a “market exchange,” then you are indeed the moron your foul-mouthed rants reveal you to be.

        Ragspierre in reply to Anonamom. | January 21, 2016 at 12:38 am

        Oh. OK, mother, you tell us what it is when an employer offers a wage and people willingly accept that wage.

        We’ll wait….

“What would it take to bring those jobs back?”

Abolish unions, the minimum wage, all forms of welfare, OSHA standards, EPA standards and the 40-hour work week. We can make them here, but would here be somewhere you want to live?

What Trump is saying is that no one can manufacture as well as the USA, if we have exchange rates that balance. It’s that easy. We invented the cell phone. You think we can’t design them? You are a funny man!

If it was a football league, our bankers lose to the Chinese bankers 12 times a year by an average score of 250 to 0 over the last 20 years. Trump is saying that we need to be more competitive with our exchange rates.

I’m sure that the elites and their bankers have a real problem with that.

    Ragspierre in reply to InEssence. | January 21, 2016 at 12:42 am

    Bullshit. We DO manufacturer things here BETTER than anyone, and the exchange rates don’t matter. We sell goods to the Chinese…and everyone else…because we produce quality at competitive rates, and in some cases unique products.

    T-rump is an economics idiot.

      InEssence in reply to Ragspierre. | January 21, 2016 at 2:11 am

      You say Trump is an “idiot” when it comes to money. But saying that “exchange rates don’t matter” is like saying money doesn’t matter. When China received the best exchange rate in the world in 1992, they had 40,000 factories being built per month. Everyone in the world was trying to manufacture there all at once, because they had the best exchange rates. They had nothing 6 months before. And you say, “exchange rates don’t matter”!

        Ragspierre in reply to InEssence. | January 21, 2016 at 8:57 am

        You’re being intentionally dense.

        I said T-rump is an economics idiot.

        And “exchange rates” don’t matter when you manufacture products (as we do) MOST efficiently, because people will buy those products.

        Exchange rates DO matter, but they are not the elephant in the bathtub you make them to be.

        I remember a coupla decades ago when people were saying Japan was going to murder us. Stupid nonsense.

        Ragspierre in reply to InEssence. | January 21, 2016 at 9:24 am

        Moreover, unless you’ve been living under a rock for the last six months, you’d know that China’s incessant quest for GDP growth through the kind of economic interventionism that Trump just loves has led to some serious economic distortions (e.g., a frightening property market, rampant industrial overcapacity, a banking sector riddled with non-performing loans, and serious capital flight), not to mention crazy stock market turmoil.

        You’d also know that Chinese “currency manipulation” is not a serious problem for the United States (probably never was), and that even the most aggressive U.S. currency hawks now acknowledge that China is not hurting the United States by keeping the yuan artificially low. Indeed, China’s “cunning” economic planners are currently struggling to keep their currency from falling, not—as Trump seems to think—from rising. So if Beijing relented to Trump’s fantastical threats and let the market dictate its currency, the result would be a weaker yuan, not a stronger one, as Trump confidently claimed last Thursday night.
        ____________________________________________

        From the piece I linked to below. It is rich in embedded links, so you should go to it and follow them.

          InEssence in reply to Ragspierre. | January 21, 2016 at 12:02 pm

          All you need to do is look at the import to export balance. China exports more than they import. In fact, that has been true ever since they received the best exchange rate. The exchange rates are set by bankers (Reagan let that cat out of the bag), and in particular the BIS (Bank of International Settlement in Basel Switzerland) sets them. BIS sent representatives to trade shows in 1990 and 1991 to tell manufacturers that China would get the best exchange rates. The manufacturers were supposed to figure out a way to manufacture in China. Anyone who tried to manufacture anywhere else would have higher costs. Did that happen? Go to a store and pick something off the shelf. Look at the bottom to see where it was manufactured. Except for something really weird, it will be made in China. Exchange rates set the manufacturing cost, and therefore, dictate where something is manufactured.

          Ragspierre in reply to Ragspierre. | January 21, 2016 at 12:16 pm

          I bet you run a really, really bad trade deficit with your grocery store, too.

          IT DOESN’T MATTER.

          Voluntary trade HAS to benefit BOTH parties (and a lot of non-parties, incidentally), or it doesn’t happen.

          And the laws of economics assure that BOTH are made MORE wealthy in the process.

          Ragspierre in reply to Ragspierre. | January 21, 2016 at 12:22 pm

          “Except for something really weird, it will be made in China. Exchange rates set the manufacturing cost, and therefore, dictate where something is manufactured.”

          That’s a total myth! I buy stuff all the time from the U.S. AND all over the flucking world. See T-rump’s clothing line hecho en Mexico.

          China IS NOT the sole manufacturer in the world. Where do you get this bullshit!?!?

          InEssence in reply to Ragspierre. | January 21, 2016 at 12:47 pm

          If you have ever run a manufacturing plant, you would know that costs matter. If the cheapest place to manufacture is in China, then that’s what you do. That’s why so much stuff is made is such a hostile and crazy (see lottery ticket war) place. If the exchanges would come close to balancing, the manufacturing in America would increase 10 fold and the wealth the middle class would balloon. I think Trump understands that, but I don’t see it in the other candidates.

          Ragspierre in reply to Ragspierre. | January 21, 2016 at 1:19 pm

          “If you have ever run a manufacturing plant, you would know that costs matter. If the cheapest place to manufacture is in China.”

          Again, TOTAL bullshit! Cheap labor is NOT “least cost labor”.

          THIS is WHY the U.S. is posting ALL-TIME HIGH manufacturing out-put…!!!

          Again, WHERE do you get this bullshit…!?!?!?!

A very large portion of the goods made in China and Mexico were once manufactured here. The tools were shipped out to access slave labor. The cost of millions of people not working offsets the cheaper goods. Globalism is a bad deal for the average person. We are less prosperous and less safe despite being told the opposite would be true.

    Ragspierre in reply to KRoyalll. | January 21, 2016 at 12:49 am

    And once, virtually all our food was grown here, and most of our people were involved in growing it.

    Economies progress and mature. And please, just stop with the “slave labor” bullshit.

    I’m often amazed at the economic ignorance of people…

“So the employees at those companies are free to just walk away in iPhone production season or complain. – no because they are slaves.”

No. They ARE free to walk away. Nobody owns them. They might not have a job if they walk away. You should go and see if you can unionize them.

“I bet when you woke up at 3 am you were making up at $17. Boo boo for you. I bet there are Venezuelan oil workers who could have come here and done your job for half of what you make and been ecstatic and willing to worked harder than you. You are just lucky to work in a field where your job isn’t being outsourced or insourced yet. Everyone is a free trader until their ox is being gored.”

You’re hyperventilating, “free-marketeer”.

“Like I said I’m a free trader but insist on fair trade.”

That’s an oxymoron.

“I have always been uncomfortable with trading with China because they are our largest geopolitical foe. I’m ok with Foxconn in Brazil. Or if they were to set up in say India.”

They have. Australia, too.

“Ilast rant point, if their workers are so eager and productive why are they trying to replace them with robotics?”

Why would you say, applying sound economics?

“Because they aren’t happy and free as evidenced by the rash of suicides that they are now better at covering up!”

Do you think MAYBE because, as workers come in from very distinct parts of China, some feel lost in a big new world without their normal customs?

We have a lot of postal employees who commit suicide, too. STFW?

Midwest Rhino | January 21, 2016 at 1:30 pm

Changes would take time but Trump goes in the right direction. Companies love to exploit “slave labor” with people living in camps. Yeah, they may be free to leave, but in failed commie states, people are left with few choices. Slaves could also run …

So does “global free trade” make the world more free, or do we just enrich and empower oligarchs and commies? I think we have to let failed evil states fail completely. The “you didn’t build that meme” applies better to US as a nation. “We” built a nation and changed our laws over time to be “fair”. That is based in the Judeo-Christian ethic.

When we enrich communists and slave owner nations, while our workers are put on welfare, we satisfy the “lusts” of the market. But life is not only about global markets, we should keep building our own house, not subsidize the slave owners.

We may produce more now than we used to, but are also idling workers. Productivity gains got spread to other countries, whereas we could have kept all workers busier here. We instead increased production here (productivity) with the robots, AND sent labor intensive work overseas. So we also increased THEIR production. Why? Because they have slaves.

Trade deficits DO matter. The balance is not necessarily that they in time buy from US, but rather they buy our debt and we must pay interest in perpetuity. AND they buy our assets and gain influence in our markets and our lifestyles, and they start buying our government, in pay to play schemes.

This “it all balances out” stuff is nonsense. Sure, the balance is now all the assets are owned by THEM, including the power and people that go with it. What idiot thinks that is a good thing, when they are freedom hating atheist communists? “oh but you don’t understand, it will be great for them to buy our assets” Yes I understand … we want them to buy what we produce, not buy US.

We are a huge debtor nation … that is bad, as we all know. Destroying the currency hurts US savers, as zero interest and QE already has. The stock market shenanigans will not hold up forever, but it deceives a lot of folks.

The sovereign decision is whether we think “America First” is xenophobic and racist, or whether we recognize our country built something worth fighting for. Jobs loved their slave labor … and is that the final judgment? We must all serve the oligarchs? Didn’t we fight wars over this crap?

We can certainly move toward Making America Great Again” by having our government put US first, instead of being bought off by globalist Marxists and Corparatists. Supply chains can be built, full employment can be regained. But not by submitting to globalist theories/lies.

This is all very simple.

    Ragspierre in reply to Midwest Rhino. | January 21, 2016 at 1:43 pm

    “We may produce more now than we used to, but are also idling workers. Productivity gains got spread to other countries, whereas we could have kept all workers busier here. We instead increased production here (productivity) with the robots, AND sent labor intensive work overseas. So we also increased THEIR production. Why? Because they have slaves.”

    What’s interesting about your screeds is that that draw so much on OccupyWhatever thinking.

    “Productivity gains got spread to other countries, whereas we could have kept all workers busier here.”

    And we could do all excavation with guys with shovels and picks, instead of using track-hoes.

    We could do all plowing and cultivating by horse and mule, instead of with a 600hp tractor.

    “This is all very simple.”

    Simply wrong and stupid.

      Midwest Rhino in reply to Ragspierre. | January 21, 2016 at 2:30 pm

      so instead of refute you go with

      A: personal attack, “you’re just like occupiers” (wrong)

      B: What you always do, misconstrue/lie about what I said.

      I said yes, keep the productivity gains, AND those laid off from productivity, put them to work in other growth areas. Instead, we sent labor overseas.

      You keep using your farm example … but when people came off the farm, they went into town to production. Now, they go out of the factories into welfare, and the jobs went overseas.

      But that reality doesn’t fit your globalist BS … so keep lying about what I said.

        Ragspierre in reply to Midwest Rhino. | January 21, 2016 at 2:46 pm

        “A: personal attack, “you’re just like occupiers” (wrong)”

        That’s a lie, and you’re a liar. I said you draw on OccupyWhatever THINKING in what you say. That’s totally TRUE, and NOT a personal attack. You don’t LIKE it. Tough shit.

        “I said yes, keep the productivity gains, AND those laid off from productivity, put them to work in other growth areas. Instead, we sent labor overseas.”

        What we DID is let the market work. The ONLY way to do what you suggest is VIA BIG GOVERNMENT DISTORTIONS OF THE MARKET.

        Just admit it. “Put them to work in other growth areas” is PURE FDR Collectivism.

          Midwest Rhino in reply to Ragspierre. | January 21, 2016 at 6:39 pm

          No, it is simply recognition that China has slave labor, and if we treat the world as one big happy Utopian family, we in reality support atheist communist regimes that use our borrowed money to build their military to kill us.

          We can trade with more democratic regimes, but countries still look out for their own interests first.

          You can’t have open borders and a welfare state. But free trade is another version of open borders. So people that would be “forced” into the labor market to get food (as China’s slaves are) instead go on welfare, get credit cards and buy China junk on credit.

          But if you want to support open border trade, I understand. Cruz said there is no bigger supporter of legal immigration than him, though he at least for now wants to delay his idea of giving 5 times as many H-1Bs.

          Ragspierre in reply to Ragspierre. | January 21, 2016 at 6:59 pm

          “No, it is simply recognition that China has slave labor”

          That’s a lie.

          “…and if we treat the world as one big happy Utopian family, we in reality support atheist communist regimes that use our borrowed money to build their military to kill us.”

          Borrowing money is another subject entirely. But riddle me this, moron. Who’s paying them back if they kill us?

          “We can trade with more democratic regimes, but countries still look out for their own interests first.”

          A stupid tautology. Duh. But traders DON’T trade unless it mutually benefits them. And BOTH are made more wealthy in the process.

          “You can’t have open borders and a welfare state. But free trade is another version of open borders.”

          That’s irrational, and another lie. I can buy or sell to someone on eBay, and they don’t move out of their country. Where do you get this bullshit?

          “So people that would be “forced” into the labor market to get food (as China’s slaves are) instead go on welfare, get credit cards and buy China junk on credit.”

          Another completely irrational statement. And an employee is NOT a slave. Stop chanting that lie! You have to work to get food, shelter, clothing, etc.

          “But if you want to support open border trade, I understand. Cruz said there is no bigger supporter of legal immigration than him, though he at least for now wants to delay his idea of giving 5 times as many H-1Bs.”

          Another complete lie. T-rump is a WAY bigger supporter of legal immigration. Read up, you ignoramus! He SAYS he’ll build a wall. He ALSO says it’ll have a BIG BEAUTIFUL, FABULOUS DOOR, and he’ll (notice the HE) will bring in the wonderful, intelligent and LEGAL from everywhere.

Midwest Rhino | January 21, 2016 at 2:34 pm

this is an oldie but goodie …

China 2030: “we owned their debt, so now they work for us”

http://www.viralviralvideos.com/2010/10/23/chinese-professor-says-america-now-works-for-us-commercial/

    Ragspierre in reply to Midwest Rhino. | January 21, 2016 at 2:50 pm

    And history shows he was an idiot.

    China is in the toilet right now, the result of doing what T-rump LOVES. A controlled economy.

      Midwest Rhino in reply to Ragspierre. | January 21, 2016 at 6:44 pm

      China is “in the toilet” compared to what? They are a communist regime controlling people, not controlling just markets. They are only growing at what, 5% instead of 20% … but that all may be lies. Their economy depends on US buying stuff faster and going into debt deeper. They’ve made out like bandits, because we made the commies a most favored nation for trade, and they built their military with the profits.

      But yeah, there is plenty of waste … they are COMMIES.

      sheesh …

Dec 28 opinion in the WSJ, profit per Apple employee is $407,000, for large retailers the profit per employee is $6,300. I just wonder why liberals don’t attack Apple for its obscene profits.

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